Hike rates

ECB could raise rates this summer before ending bond purchases: Holzmann

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ZURICH, February 23 (Reuters)The European Central Bank could start raising interest rates before ending its bond-buying program, ECB policymaker Robert Holzmann said in an interview with Swiss newspaper NZZ, saying that a rate change would already be possible this summer.

As inflation in the eurozone has hit record highs in recent months, the ECB has backed away from its pledge not to raise rates this year and several policymakers are openly advocating an end to bond buying this year, previously declared as a condition precedent to any rate hike.

However, Holzmann said it was possible for the ECB to deviate from the policy stance that any interest rate hikes would come “soon after” the end of quantitative easing, and change interest rates first.

“As for the interest rate outlook, the ECB has always signaled that an interest rate hike should only take place soon after bond purchases end,” Holzmann said. hawkish chief of the Austrian central bank, in the interview published on Wednesday.

“But it would also be possible to make a first interest rate step in the summer before the end of purchases and a second at the end of the year. I would be in favor of it.”

VSCalling the exit from the era of negative interest rates an “important signal” for society and markets, Holzmann said he would like to see two interest rate hikes by the end of 2022 or early 2023.

“Some of my colleagues might be even more progressive here, while others would be more cautious,” Holzmann said.

He said a policy rate of around 1.5% would be a benchmark for neutral monetary policy.

“I think a policy interest rate of very roughly 1.5% in 2024 could be realistic, although it may well move up or down a bit,” he said.

ECB policymakers will convene at an informal meeting in Paris on Thursday and hold their next policy meeting on March 10.

Economists polled by Reuters now expect policymakers to end bond purchases in the third quarter of the year, while the first rate hike could come in the third or fourth quarter.

(Reporting by Brenna Hughes Neghaiwi; Editing by Michael Shields)

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